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Fair Play in World Trade Towards a Social Democratic Redesign of Trade Policy

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Fair Play in World Trade Towards a Social Democratic Redesign of Trade Policy DECEMBER 2018 FAIR PLAY IN WORLD TRADE TOWARDS A SOCIAL DEMOCRATIC REDESIGN OF TRADE POLICY Thorsten Schäfer-Gümbel with Bernd Lange MdEP, Matthias Miersch MdB, Sascha Raabe MdB, Dirk Wiese MdB, Fabian Bohnenberger, Clara Brandi, Herta Däubler-Gmelin, Alexander Geiger, Heike Joebges, Florian Moritz, Hubert Schillinger, Evita Schmieg, Jochen Steinhilber and Johanna Uekermann FAIR PLAY IN WORLD TRADE Contents Summary � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �3 Preface � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �4 A New Debate on Trade � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �5 Conflicts and Trade-offs in International Trade Policy ���������������������������7 Between Liberalised Markets and Democratic Decision-making Autonomy � � � � � � � � � � � � �7 Between National Control and a Common EU Trade Policy � � � � � � � � � � � � � � � � � � � � � � � � �7 Between the Winners of Globalisation and Greater Prosperity for All � � � � � � � � � � � � � � � � �8 Between Multilateral Rule-making and Bilateral Preferentialism � � � � � � � � � � � � � � � � � � � � � �8 Between Economic Objectives and Sustainability � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �9 Guiding Principles for a Social Democratic Trade Policy � � � � � � � � � � � � � � � � � � � � � � � � �11 A Social Democratic Reform Agenda � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �12 1� An Inclusive and Solidarity-based Approach to Redesigning the Trade Architecture � � � � 12 2� Strengthening Democratic Processes and Transparency in Trade Policy � � � � � � � � � � � � � 13 3� Promoting and Enforcing High Labour Standards � � � � � � � � � � � � � � � � � � � � � � � � � � � � �14 4� Protecting the Rule of Law by Balancing Investor Rights with Investor Obligations � � � � �16 5� Reducing Current Account Surpluses and Supporting the Losers of Globalisation � � � � � 17 6� Achieving Social and Environmental Sustainability through a Coherent Trade Policy � � � � 18 7� Placing a Stronger Focus on Global Value Chains � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �18 The Authors � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �19 FAIR PLAY IN WORLD TRADE Summary Trade policy has an impact on the everyday lives of many n To shape global trade policy structures collectively people – in Germany, and indeed the world over� Trade through a solidarity-based approach. This includes policy must, therefore, not be an end in itself but has to strengthening the role of the WTO as a monitoring, serve broader objectives� It must be based on fair multi- enforcement, and dispute settlement body, always lateral rules and take all aspects of sustainability into con- negotiating plurilateral agreements as open agree- sideration� Here, the social-democratic approach differs ments under the auspices of the WTO, and making fundamentally from that of market liberals in its belief it mandatory for bilateral agreements to comply with that trade relations must follow politically defined rules� WTO rules� For us, a fair and democratic trade regime is one in which n To reinforce the rule of law and binding obligations the goods that are traded on our markets are produced for investors. This comprises placing foreign and under fair social and environmental conditions and hu- domestic investors on an equal footing, protecting man rights are respected; in which we strive to safeguard specific areas like labour and social law, public ser- and improve the development prospects of our trade vices, and international obligations such as climate partners in the global South; in which trade strengthens protection from legal action by investors, and making rather than undermines rights; in which the government’s companies’ rights more heavily contingent on the ful- capacity to provide public services, both here in Germa- filment of obligations with regards to transparency, ny and in our partner countries, is not restricted; and in preventing tax evasion, and conforming to standards, which we give multilateral approaches precedence� The for instance� process of negotiating trade agreements must also be- come more democratic and transparent� n To reduce Germany’s current account surpluses. This would mean, for example, substantially increasing in- What we need, therefore, is a new trade policy, one which vestment in education, transport infrastructure, digi- can be shaped and one which rebuilds trust, strengthens talisation, and the transition to renewable energies in democracy and the rule of law, and enforces justice� the years ahead� Our objectives are therefore: n To promote and enforce sustainability standards. This involves requiring all trade partners to have at least n To strengthen democratic processes and transparen- ratified all eight core labour standards before a trade cy in trade policy. This entails expanding the right of agreement can enter into force, providing civil society control and decision-making powers of the European organisations in the advisory groups set up by the EU Parliament, ensuring that trade policy debates also full access to documents, establishing a new dispute take place in national parliaments, ensuring also that settlement mechanism in which trade unions are also trade union and civil society representatives are given given an opportunity to demand compliance with the an opportunity to participate in the processes of ne- agreed standards, and granting developing countries gotiation and implementation, and promoting public positive trade preferences if their products are sus- debate on trade policy objectives� tainably manufactured� 3 FAIR PLAY IN WORLD TRADE Preface Dear Readers, Two years ago, tens of thousands of people took to the sumer standards� In the meantime, the key issues have streets� Party offices were inundated with letters and calls become a lot clearer: we need more public discussion from citizens� The SPD hosted a Party Convention on the and debate on trade policy� We can only rebuild confi- issue� And all this activity was triggered by a widespread dence that trade policy will be organized in a transparent protest that had mobilized citizens against the Transat- and democratic manner if we take clear positions and lantic Trade and Investment Partnership (TTIP)� Supply hold discussions on contentious issues, both in society chains and ILO core labor standards became as much a and in parliaments, and set binding rules for the mar- part of the vernacular as talk of chlorinated chickens and kets� To be able to play an active role in shaping trade courts of arbitration� A lot of water has passed under the policy, however, Germany must also continue to build up bridge since then� In just a short time, Donald Trump’s trust beyond its borders, for example by taking seriously antics have transformed the trade policy debate beyond the criticism expressed by many of our trade partners of recognition� With his »America First« policy and its fo- its enormous current account surpluses� cus on partitioning, Trump has intensified trade conflicts and incited new (and fueled old) antagonisms� In so For us social democrats, a fair trade policy is an essen- doing, crises have been provoked which undermine the tial building block toward creating a fair global order� In very existence of the rules-based system of global trade� view of the challenges I have just mentioned, we need a Trump is also sending the disastrous message to the in- coherent programmatic basis for our trade on all political ternational community that it is better to tackle global levels� This publication aims to provide that foundation� challenges unilaterally and driven solely by self-interest� It was written in cooperation with experts from politics, science, industry, trade unions, and civil society� It puts Germany, on the other hand, relies more than any other into words structural objectives derived from this collab- country on open markets and a fully functioning global oration that can be used as a basis for social democratic economy� However, even beyond the conflict with Wash- trade policy; moreover, it outlines the main features of a ington, the international trade system is in need of reform� fair and just trade policy and what priorities such a policy The latest round of major trade negotiations, the Doha should set� We envisage our paper as a contribution to Round, which commenced in 2001, has broken down� the discussion on how international trade policy should At the moment it seems impossible to reach a consensus be shaped, but also as providing guidance to parliamen- among all 164 WTO member states� We therefore need tary, governmental, and civil society decision-makers� It to rethink trade policy� But what form might a progressive is our intention to provide direction� trade policy take? And how can progress be achieved un- der the auspices of the World Trade Organization? I would like to thank everyone who has made a direct contribution to this paper, as well as the many experts Not only has it become more difficult to reach a consen- who supported us and enriched our knowledge with their sus between trading blocs and countries� Also within Eu- input during our workshops� I would also like to extend rope and within Germany,
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